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The Bottom Line

Evan Davis gets to the heart of the big finance stories at The Bottom Line.

This week’s recording of the BBC and Open University’s The Bottom Line is concerned with the impact on business in an apparent age of hyper-mobility and feedback in organisations. The three guests are drawn from: the Engine Group, an international communications company; the leading global electronic stock exchange NASDAQ (the National Association of Security Dealers Automated Quotation system); and the worldwide corporate travel services company Hogg Robinson. The title of this blog is taken from the name of the 1975 book, Faith in Fakes: Travels in hyper-reality by the Italian writer Umberto Eco, and the book serves as an introduction to semiotics: the study of the interpretation of symbols.

It seems that discussion of the socio-economic impact of globalisation is frequently symbolic and the claims to the hyper-mobility of society are in fact hyper-real, that is to say the inability to distinguish what is real and what is not. In more prosaic terms, it is the tendency to confuse form and function. The form is the growth of the World Wide Web, the Internet and other related electronic media, which appear to break down national barriers to business and social mobility, while the function relates to the purpose of ICT (Information and Communications Technology). ‘Form follows function’ is a long established principle in architectural and industrial design, but the reification of virtual media leads to the conflating of the two. It is a bit like modern economics in which technique has triumphed over thought, as the financial crisis and global recession has shown to all our costs.

The City of London skyline.
photo © copyright Jupiter Images

For any idea or concept, one should apply a simple test: “Where’s the theory?”, “Where’s the evidence?” and “Where’s the data?” And, like globalisation, hyper-mobility is strong on theory, weak on evidence, and the data almost non-existent. If one looks at telephone, internet and airline traffic, there is a distinct supranational regional clustering which in turn reflects the economic strength of the world’s three dominant regions: North America; the European Union and East Asia. Also, if one looks at the digital divide, there are strong intra- as well as inter-national differences. If one adds in the locational decisions of firms, we can see that access to market still remains a prime consideration.

For example, Rolls-Royce Engines have a joint venture to produce engine parts in China – rather than exporting them from its UK manufacturing base in Derby – thereby reducing transport costs and environmental impact. NASDAQ had first mover advantage in being the global electronic stock exchange, yet it owns several stock exchanges in Europe, including NASDAQ OMX, the Nordic electronic financial trading platform, and a joint venture in the Gulf, NASDAQ Dubai. Although global in scale, the scope is distinctly regional. Furthermore, in an apparent age of digital determination, advanced business activities still crowd together in the world’s dominant cities, suggesting that agglomeration of these activities is an important source of competitive advantage. It is thus less about managing the impact of imagined hyper-mobility, but rather how to manage the real regional distribution of international activities for firms with global reach.

This brings us to our second possible fake, feedback to customers and employees. The comparative advantage of the Japanese economy and the competitive advantage of its firms have for many years been based on the process of kaizen (continuous improvement): incremental change with ideas coming from employees. However, for Japanese firms, customer feedback is also crucial in order to sustain the quality of the goods and services they provide and thus also their market share. Similarly, Motorola introduced the Six Sigma methodology to iron out defects and maintain quality of output. The caricatured British firm of the past, characterised in the Peter Sellers film, I’m All Right Jack, used the suggestion box, which often included appeals to the management of a physiological nature, but, by and large, feedback to employees was a didactic call to work harder.

Many contemporary firms cite their employees as their major asset and institute customer relationship management systems, but these are frequently mere rhetoric rather than an engagement with the internal and external reality they face. Feedback needs to be systematic and personal, whether it is to a customer or an employee. If firms don’t respond to the market, they go out of business. If employees are treated as liabilities rather than as assets, an organisation’s reputation will ultimately suffer.

Our faith in fakes is commonplace but if there is a prospect of a hyper-mobile society with all it entails, the dominance of white men of an uncertain age in the board rooms and executive committees will have to come to an end. This is one important feedback from the contemporary business environment, if whose existence is not to become counterfeit then travels in hyper-reality will have to be constrained, otherwise any future mobility, hyper- or not, will be limited.

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About the author

Leslie Budd is Reader in social enterprise at The Open University Business School. He is an economist and has written extensively on the relationship between regional and urban economics, and international financial markets.

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Blogging about

The Bottom Line

Evan Davis gets to the heart of the big finance stories at The Bottom Line.

Does the Internet herald the death of a salesman? Not according to leading retailers like the John Lewis Partnership. Charlie Mayfield, CEO of the partnership, recently said customer service in the store is likely to play a big part in the future success of the business.

Over the last 30 years, there has been a general sense of willingness on behalf of suppliers and customers to develop increasingly close ‘emotional’ relationships based on trust. Buyers reward suppliers with brand loyalty, suppliers in turn develop strategies to energise this ‘connective’ relationship.

Until the Internet became a commercial tool, relationships were developed personally through sales representatives and customer service staff. As customers and suppliers become increasingly physically connected to one another via the Internet, the big issue is whether the nature of the relationship is changing as a result of transactions taking place online.

Technology companies have eagerly taken on the challenge to create digital solutions which can replace human interaction. Recently, Skymol has launched new software to add the human touch in a virtual world where customers can expect to engage in live voice and video chat to aid their purchasing decision. In other words, businesses can do personal selling online.

However, digital sales personnel are nothing new. In 2001 LifeFX created business avatars to help make customers feel more ‘at home’ when using the Internet to purchase goods and services. The company added a human face to standard email communications but it never became a mainstream business application.

Perhaps the heart of the question lies in whether online sales are based on short term transactional relationships, like those in the 1960 and 70’s, whereby sales personnel were concerned about making the one-off sales. Or alternatively, whether they’re based on longer-term close connective relationships.

Relationship marketing was a fundamental shift in the philosophy of the organisation, which rapidly grew in the 1980. It’s based on the fundamental premise that it’s important to develop ongoing relationships with a customer by focusing on quality, marketing, and customer service.

At the turn of this century prophets of doom suggested the internet would annihilate existing business methodologies and professions. Indeed, leading retail consultants predicted the demise of the high street in late 1990 as a result of online selling via the Internet. However, as we approach the end of the 00s, personal selling is still very important to many businesses. Whilst Internet sales continue to grow, and in some sectors account for a significant proportion of sales, this is not the case for all businesses and for the time being at least the high street remains with us.

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Blogging about

The Bottom Line

Evan Davis gets to the heart of the big finance stories at The Bottom Line.

In this week’s The Bottom Line, there was a lot of talk about the demise of the traditional salesperson and how they’ve become obsolete in our online, low-cost world. And there’s a lot of truth in that. In my “civilian” life as a consumer, I rarely deal with salespeople these days. In the past week, I’ve bought a holiday, books, insurance, baby clothes and a DVD, all without even speaking to a living soul. Like many others I find that convenient, cheap and, whilst I might miss some human contact, I don’t miss the traffic jams or the surly young man who doesn’t even know how to smile or make eye-contact when I give him my money.

But in my working life, as a management researcher looking at how firms create and implement strategies, it’s a different story. In particular, B2B (that is, business-to-business) selling is very different from B2C (business-to-consumer) selling. That’s not to say the traditional salesperson has been left untouched by the tsunami of web-based innovation. The firms I study are keen, where they can, to reduce the numbers of costly and, let’s be honest, often hard to manage road-warriors who burn expenses and are often inflexible. Because of these drawbacks, they’ve shed their traditional “order-takers” and replaced them with call-centres and on-line channels, just like in the consumer world.

What’s left, in many B2B sales operations, is a small, better paid and more important sales force. In particular, those salespeople who survived the shake-out now tend to have different titles (almost no-one is called a ‘sales rep’ these days) and have different roles. There are three of these new, super-salesperson roles worth mentioning here.

The first is the technical specialist. Many products that companies or organisations buy are very technically complex. IT, pharmaceuticals and capital equipment are obvious examples, but lots of outsourced services, like maintaining the buildings and recruitment, are more complex than you might think. In these cases, the old-fashioned salesperson has never had much of a role.

Technical specialists have the job of selling these complex products and services and to do it well they need to be well-educated, well trained and at least as much as a consultant as they are a sales rep. These people aren’t under threat of replacement by a website or a call centre and in fact most companies have trouble getting enough good technical specialists. To quote one executive I met “Getting geeks is easy; getting reps is easy; getting geeks who can sell is very hard.”

The second species of salesperson for the modern world is the key account manager or KAM. As is the way of things, companies sometimes re-label ordinary reps with this grand title in order to make them feel more important, but a real KAM is a very different beast. Their task is to make sure large, profitable accounts stay that way in the long run. They spend little of their time actually selling and most of it as a sort of project manager or, as one KAM told me, an orchestra conductor.

In key account selling, contact between buyer and seller is complicated. Our techies talk to their techies, our lawyers speak to their lawyers, our accountants speak to theirs and so on. The job of the KAM is to make sure this happens, that nothing falls through the cracks and that the customer remains happy and a source not just of profit but of market knowledge too. This takes a very different skill set from old-fashioned selling and many more reps aspire to KAM than can actually do it. Like technical specialists, good KAMs are worth their weight in gold.

The final species of super-evolved salesperson is less common and found in markets that are technical and where the buying process is complex. In this sort of market, certain customers become experts and influence the rest of the market. In pharmaceuticals, for example, these might be professors in medical schools. In corporate IT, the IT directors of big multinationals fulfil this role. The industry jargon for these influencers is Key Opinion Leaders (KOLs) and the über-reps that work with them are typically called KOL managers.

Their job begins like a technical specialist, persuading the KOL that their product is best through a very detailed scientific sell. But the KOL manager isn’t measured by his sales figures. Their goal is influence and success is measured by getting the KOL to publish, speak and otherwise endorse the product so that the more mainstream customers will follow. Like the other two kinds of advanced salespeople, good KOL managers are priceless. This is especially true since KOL management is often a team task and a good KOL manager has to combine the technical skills of a specialist and the management skills of a KAM.

So, as with many things in management, the picture is more complex than the headline. The traditional salesperson is fast becoming obsolete, but there’s more to it than that. The best salespeople have become specialists, KAMs and KOL managers. In doing so, they’ve become more important, better paid and much more employable.

Further reading

An introduction to business studies

Myth, reality and requirements in pharmaceutical Key Account Management
by Brian D Smith
in Journal of Medical Marketing 2009

An Exploratory Study of Key Opinion Leadership Management Trends amongst European Pharmaceutical Companies
by Brian D Smith
in Journal of Medical Marketing 2009

About the author

Dr Brian D Smith is a Visiting Research Fellow in The Open University’s Marketing and Strategy Research Unit. He is the author of over 100 books and articles and runs PragMedic, a specialist strategy consultancy.

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